Buying your first home?

The latest first time buyer news, the most up to date news service exclusively for first time buyers.

 

Negative equity returns to haunt Australia

THE scourge of negative equity has spread to Brisbane as the property downturn continues to slug investors and the lower end of the housing market, but the Perth market continues to fire.

According to Australia's largest mortgage broker, Australian Finance Group, falling property values in parts of Brisbane has led to an increase in the number of owners with mortgages bigger than the value of their homes.

"In some of the outer Brisbane suburbs we are seeing valuations for house-and-land packages purchased mainly for investment purposes falling short of purchase prices," AFG executive director Malcolm Watkins said.

AFG said some new construction projects in that state were being independently valued at 20 per cent below asking prices.

"That's your first classic sign that things are slowing right off and people are becoming far more cautious," Mr Watkins said.

Prices were also coming under pressure in parts of Melbourne with valuations of properties "in many cases showing no growth or declining values during the past 12 to 24 months".

However, it is Sydney where prices have fallen the most, with the highest proportion of families facing the prospect of negative equity.

"Many owner-occupiers, seeking to refinance their homes, are being disappointed by the lower-than-expected valuations being achieved," Mr Watkins said.

"If larger numbers of owners are forced to sell, this will trigger even greater declines, affecting more property values."

Unit developments at Green Square in Sydney's inner southwest, and outer northern suburbs such as Waitara and Hornsby, had been hardest hit by the downturn.

Apartment values had fallen by as much as 20 per cent in Green Square, where developers were opting to rent out apartments rather than sell them for fear of further price falls.

Properties at the lower end of the market were worst affected during the year, with values at the top end of market continuing to surge.

AFG said the average Australian mortgage had grown to $306,783.

Perth continued to rocket in the year to August, with average mortgages in Western Australia now the second highest in the country at $340,531.

This is above both Queensland at $288,823, and Victoria at $283,717.

Average mortgages in Western Australia were behind those in NSW, which averaged $377,068.


More details about Negative equity returns to haunt Australia (opens a new window)

For first time buyer mortgage advice please click here or phone 0800 5999 007